Biogen to pay rival $1.25b to settle patent dispute
Biogen Inc. has settled part of an ongoing patent dispute with Forward Pharma A/S, agreeing to pay the Danish biotech company $1.25 billion to license intellectual property covering an important ingredient used in Biogen’s top-selling multiple sclerosis drug.
The deal, made public on Tuesday, gives Cambridge-based Biogen exclusive licensing rights to the active ingredient, dimethyl fumarate, even as legal proceedings continue in the United States and Europe. The case now centers on whether Forward Pharma’s patent claim is strong enough for it to receive annual royalties from the sale of Biogen’s pill, Tecfidera.
The drug generated sales of $3.6 billion in 2015, the most recent year for which Biogen reported revenues. If the Danish company prevails on the ongoing part of the patent case, Biogen would have to pay it up to 10 percent of sales initially, and as much as 20 percent starting in 2029. If the ruling goes Biogen’s way, it would not have to pay any royalties.
In effect, the licensing agreement, which must still be approved by Forward Pharma shareholders, guarantees Biogen the bulk of Tecfidera sales even if it loses the patent case. Forward Pharma, which is using dimethyl fumarate to develop a drug of its own, challenged a Biogen patent on the ingredient, claiming it owned a patent preceding Biogen’s.
A ruling in the US case is expected later this year from the Patent Trial and Appeal Board of the Patent and Trademark Office. A separate case is pending before a European patent agency, but the timetable is not clear.
Biogen’s deal with Forward Pharma was applauded on Wall Street for “largely removing the overhang on the [Biogen] stock from this litigation,” Salim Syed, biotech analyst at Mizuho Securities USA in New York, wrote in a note to investors Tuesday.
It also signals that Biogen’s new chief executive, Michel Vounatsos, who took over earlier this month, is eager to end the long-running litigation involving Tecfidera and move the company forward. While it remains the world’s largest seller of MS medicines, Biogen last month won US approval for the first spinal muscular atrophy treatment.
Vounatsos has promised to focus heavily on developing a drug to treat Alzheimer’s disease, one of the largest unmet medical needs for the aging baby boomer generation.
Some analysts said Biogen’s settlement with Forward Pharma was expensive, but has the potential to extend the patent life of Tecfidera from 2022 to 2026 or 2028.
“Today’s settlement is effectively a $1.25 billion insurance policy, which provides Biogen intellectual property for Tecfidera beyond 2023 regardless of whether or not Biogen wins or loses,” John Scotti, an analyst with Evercore ISI in New York wrote in an investors note.
Biogen shares closed 0.6 percent lower Tuesday, at $283.01. Forward Pharma was up 48.2 percent to $27.20.
Executives at Biogen and Forward Pharma were not available to discuss the settlement and licensing agreement Tuesday, representatives for the companies said. In a statement, Vounatsos said the deal — reached between Forward Pharma and two Biogen subidiaries, Biogen Swiss Manufacturing GmbH and Biogen International Holding Ltd. — “will clarify and strengthen our intellectual property for Tecfidera.”
But the Cambridge company continues to face another closely watched patent challenge to Tecfidera, from Texas hedge fund manager Kyle Bass, who has been working for years to invalidate key intellectual property rights of leading biotech companies.
Analysts said the Forward Pharma licensing deal, by giving Biogen rights to dimethyl fumarate, could help insulate it from the challenge by Bass and other patent challenges that might arise from competitors in the multiple sclerosis drug market.